SWOT analysis of YUM Brands

Yum brands is one of the strong fast food chain brands across the world. It owns major fast food franchise’s like KFC, Pizza hut, Taco bell, little sheep and others. Naturally, with such top retail chains belonging to Yum brands, their presence worldwide is phenomenal.

Yum brands is considered the world’s largest fast food chain and has more then 40000 restaurants across the world. It has strong presence in China and India – two of the most populated nations on the earth. It is known for its franchise model and also for licensing. It is present in across 130 countries in the world.

Here is the SWOT analysis of YUM brands

Strengths in the SWOT analysis of YUM Brands

Owner of the big three – YUM brands is distinctive because it is owner of the big three brands in the world – KFC, Pizza Hut and Taco Bell. Together, these three brands within themselves have established themselves strongly in the fast food segment and are world renowned.

China dominance – Yum brands has an absolute dominance of the Chinese food market wherein KFC is a major hit and has a lot of turnover due to the love of non vegetarian food. It is so popular in China that Yum has decided that it will have two companies – Yum brands and Yum China.

Massive operations in India – India being another populated country like China, Yum also has a massive presence in India and is expanding day by day. It has a an Indian arm known as Yum India which is responsible for all the franchise’s operating out of India. Pizza Hut and KFC are the two major players in India for Yum brands.

Brand equity and valuation – Yum brands has a tremendous brand valuation and as of 2016 it is valued at 33.1 billion dollars. It is ranked 649 in the top 2000 brands ranking. Off course, its poor ranking just means that Pizza Hut and KFC are ranked higher then YUM Brands in the brand ranking table because of their individual popularity.

Expansion advantage – With such massive operations, Yum brands has a huge competitive advantage and it will not be easy for any smaller brand to stand up against them. It would be possible only for Hardcastle restaurants (McDonalds) or for Dominos to actually hurt yum brands badly.

Management is excellent – A key factor for Yum brands is that they have been present during good and bad business environments and yet they have thrived through the years and grown. This speaks volumes of the excellent management team behind Yum brands.

Weaknesses in the SWOT analysis of Yum brands

Quality – A major issue which faced KFC at least in India was its quality issue. You might go far and wide but you will find the quality of McDonalds consistent. However, KFC has repeated complaints in its inconsistency to provide the same taste across multiple outlets. This is off course a big deterrent to them.

Question mark brands – Although there are some star brands in the brand portfolio of Yum brands there are some question marks as well. Brands like Banh Shop, East Dawning have not worked out for yum brands bringing the profitability down. Over concentration on 3 brands is a negative aspect for Yum Brands

Customer service – McDonalds is applauded for their customer service but the same cannot be said about KFC or Pizza Hut. Yum brands needs to focus more on customer service and train their franchise’s better. More importantly, they need breakthrough measures to make their customer service beyond normal so that customers leave happy and more then satisfied. Off course, easier said then done.

Constant supply chain issues – A major issue of a hospitality segment this big is the supply problems. When you are expanding very fast, supply suffers and as a result, the food material might not reach far away outlets fresh and healthy. This results in losses and in some cases might result in customer dissatisfaction.

Opportunities in the SWOT analysis of Yum Brands

R & D – A major opportunity for Yum brands is to leverage the existing finance with them to start more daring franchise’s in the market. For this, they need to carry out R & D to come out with regularly new dishes and to make customer’s mouth water. After all, that is the secret to really conquer the market.

Localization – One of the brands amongst all brands of Yum which localises very well is KFC. KFC started many different types of burgers and food items just to serve to local market in the areas where it was operating. However, the same cannot be said for Taco Bell and Pizza Hut which have limited localisation options. However, better localization will increase the overall revenue of the brand itself.

Emerging markets – Expansion is the key to the continuous growth of a brand like Yum brands and it has to keep expanding in new avenues to keep growing. One of the best options to keep expanding is to invest in stores in emerging markets. Emerging markets have a better spending power and people there are ready to try something new. As a result, new franchise’s are in high demand in emerging markets. These should always be the target markets for yum brands.

Better operations – A major factor which can boost the revenue and profits of a firm the size of Yum brands is better operations. Yum should find tune their operations as much as possible and find out unique ways to ensure that each franchise is maintaining the quality and promise of the brand. When it does this, it will find welcome growth on its doorstep.

Threats in the SWOT analysis of Yum brands

Competition from the big two – KFC is the star for YUM Brands but has a major competition from McDonalds which is the majority market share holder where burgers are concerned. Similarly, Pizza Hut is the second biggest brand of YUM but is fast being challenged everywhere by Dominos.

Health conscious mindset – This is affecting the complete fast food industry and YUM brands should not be any different. USA is a country where there is a major obesity problem and hence the general awareness of the affects of fast food have increased. This naturally results in lesser consumption of fast food. Besides US, there are many other countries where fast food is being looked down on. Doctors and health activists actively condone the consumption of fast food. And this naturally will affect the company slowly by surely.

Unorganized competition – Competition not only from KFC or McDonalds but many indirect competitors like Starbucks or other fancy restaurants or even local fast food chains are all competitors for Yum brands. As small businesses grow in frequency, they offer better services to local customers and might offer better localised taste. As a result, this unorganised competition together becomes heavy for the parent brand.

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About Hitesh Bhasin

I love writing about the latest in marketing & advertising. I am a serial entrepreneur & I created Marketing91 because i wanted my readers to stay ahead in this hectic business world. You can follow me on Facebook. Let's stay in touch :)